Ernest was a veteran of World War II; he had served in the Marines. His wife, Sue, worked in civil service for almost 40 years. They were financially secure. When they passed away, him in 2006 and her in 2010, they were survived by three children, eight grandchildren, and several great grandchildren.
(Ernest and Sue are fictional but representative of some people sued in foreclosure in Texas courts.)
No one has paid the property taxes on Ernest and Sue’s home since Sue’s death. Now the county, city, and school district are going to foreclose on the tax lien provided by Texas law – take it and sell it at auction to collect the overdue taxes, plus penalties and interest, plus the title abstractor’s fee, plus court costs, including a fee for an attorney ad litem.
Along with a lot of other lawyers in this county, I accept court appointments to serve as attorney ad litem for deceased or missing defendants in tax foreclosure cases. The ad litem’s role is to try to locate the homeowners or their heirs, and, to ensure that the legal rights of the homeowner are protected. In other words, that the county, city, and school district present the evidence at trial to prove they are entitled to foreclosure. It doesn’t pay a lot but the work isn’t hard and when I can locate an heir and they are able to pay the taxes and save the house, I get a sense of personal satisfaction. Sometimes I come across a situation that is completely avoidable. Home ownership is part of the American dream. So when I see an extended family that is going to lose a home like this, I’m troubled. And when it is completely avoidable, I’m frustrated — even baffled.
How does this happen to a family like Ernest and Sue’s? And what steps can you take to reduce your risk?
First, remember, as always, this post is not intended as legal advice, but is offered for general informational or educational purposes. You should always consult a lawyer about your specific situation. In fact, one of the mistakes people make that creates this risk is trying to avoid lawyers.
Under Texas law, property always belongs to someone, even though it may not be clear who that someone is. And the property owner is always responsible for paying the taxes, even if he or she has not received a bill for the taxes. So legally, we could say that it’s always the property owner’s fault if the taxes are overdue.
Under Texas law, when someone dies, even though ownership passes, title still has to be recorded in the new owner’s name. In most cases, you’re going to need a probate court to be involved to transfer title. It may seem to the surviving spouse or an adult child already living in the home that there is no practical reason to probate the deceased person’s estate. It may seem that probate is just a needless hassle and a needless expense in lawyers and court costs. Don’t make this mistake.
While ownership of the land passes at death to a person’s heirs under the Texas Probate Code, determining who those rightful heirs are is a function of the probate courts. Probate does not have to be expensive or time consuming, especially if the deceased had a will that provided for an independent administrator, and particularly if no one is going to challenge the will. But, until that process is complete, you will not be able to record a change in title in the county land records (unless the deceased used some other planning tool, such as a living trust, to convey title outside of probate). And, if keeping this land is important to you, RECORDING THE CHANGE IN TITLE IS ESSENTIAL. It’s the record owner that willl be notified by service of process when there is a lawsuit to foreclose on the property. If you’re not the owner in the property records, you may not even find out the property is being taken and sold.
Under the Texas Tax Code, a tax lien attaches to real property on January 1st of the tax year for which it is assessed. The person who actually owned the property on January 1st is personally liable to the county for the tax for the entire year (even though a buyer may be contractually liable for part of the year). If those taxes are not paid for any reason, the tax assessor sends delinquent notices to the record owner’s address as listed in the tax records. Again, if keeping the land is important to you, NOTIFY THE COUNTY TAX ASSESSOR OF CHANGES OF ADDRESS AND OWNERSHIP.
Just as importantly, NEVER IGNORE A NOTICE OF DELINQUENT PROPERTY TAXES. For federal income taxes, if you don’t pay the IRS, yes, they will eventually come after you and you will regret it, but if you don’t pay your local property taxes, you will lose your house at an auction. This is usually a bad way to lose the house because houses sold at auction are sold, usually, at big discounts. Wouldn’t it make more sense to sell the property yourself at a price that covers the taxes and leaves some cash to be divided among the owners? Isn’t it better to have some cash left over than no cash left over?
If more than one person inherits a single piece of property and they can’t agree what to do with it, in Texas, you can sue to partition the property and/or either force a sale of the home or have the other heirs buy out your share.
What I think sometimes happens in these cases is that the record owner (an elderly couple or widow) dies, leaving the home to their child or children. However, the child or children are also elderly and not able to take care of it or manage their affairs. So the record owner’s grandchildren end up being responsible for it. They may not live close to it, or they may not feel a close connection to it, so they may not pay enough attention to it. Or, there may be someone in the family who needs somewhere to live. Or, there may be disagreement in the family over what to do with it. Someone may agree to be responsible for the house or everyone just assumes that someone else is taking care of the taxes.
So Ernest and Sue’s home is now empty, and no one has paid the taxes. Delinquent notices could have been going to the empty house. But this may be an unusual case and the county tax assessor may have been notified that their oldest son is the new owner. So instead the delinquent notices are going to the address of Ernest and Sue’s older son, Ernie Jr. Ernie Jr. has mentioned the notices to his own son, Rowdy, who is supposed to be taking care of the house. Rowdy makes a very good living which keeps him very busy. He figures he’ll take care of the taxes when he can. He loses track of the time. The county (and city and school district) files suit for the delinquent taxes.
Whom do they sue? The record owner of the house – Ernest and Sue – and “if they are deceased, the unknown heirs” of Ernest and Sue. Sue never had title changed to her name. Ernie and his brothers never had it changed to their name. The County doesn’t know whether or not Ernest and Sue are deceased, and if so, who inherited the house — a child, a grandchild, a friend, or their favorite charity. So the county sues Ernest and Sue and sends a process server to their last known address to try to serve them with process.
The process server is completely unable to serve Ernest and Sue (of course). So next the county serves them by substitute service (service by publication, also discussed in an earlier blog post; the recent case discussed in that post may have implications for these foreclosure suits). The Court appoints an attorney ad litem. And the ad litem tries to locate the heirs. There is a good chance in this case that obituaries and publically available records will lead the ad litem to the heirs. If the heirs don’t respond to their mail, the doorbell, whatever other methods the ad litem uses to try to reach them, the house will ultimately be sold at auction. If they do respond, they may finally learn the house is facing foreclosure and they may finally get serious about paying the overdue taxes (plus all of the penalties, interest, fees, and court costs, which may increase the total bill by 50% or more). If they still choose not to take care of their obligations, they will lose the house anyway.
As an ad litem, I hate to see that, but in the end I console myself with two thoughts. (1) I have required the county to present the evidence to prove their case in court. In doing so, I gave the rightful legal owners every chance I could to comply with the law, pay their taxes, and keep the house. And, (2) someone who wants the house should have it over someone who doesn’t. It makes no sense to have a house sitting empty, becoming infested with bugs, rodents, even drug dealers. If it sits empty, thieves will gradually strip it of copper, appliances, and other hardware. The lawn is not being cared for. The property is unsightly. And the neighborhood suffers in quality of life and in property values.
So if I had my way, of course, people would pay their taxes. But hey, stuff happens. So I also wish that people would
– probate loved ones’ estates promptly – consult a probate attorney
– transfer title to real estate promptly
– make sure the county tax assessor has the right address to send tax notices
– sell property (fast) if it is too hard to take care of it
– don’t assume someone else is going to take care of it
– don’t make oral agreements regarding a house – consult a real estate attorney
If everyone satisfied my wishes, I’d be out of the ad litem business for tax foreclosure cases, so I’m not trying to make money here, but trying to lose it. Best wishes.